Kelly Lamrock's Blog

Thursday, August 28, 2014

So, the Liberals' plan to borrow $900million plus interest, for unnamed "infrastructure" projects, isn't going over well among concerned citizens and, really, anyone. Two days after the growing chorus of worry about the fitness for office of the Liberal team, one worthy foot soldier, the bright and loyal John Case, has stepped up to try to defend the Gallant borrowing plan.

Let's take these two points that the Liberals now say were tragically "left out" of my original blog post.

LIBERAL POINT #1: WE NEED TO BORROW $900MILLION BECAUSE BRIDGES

Even though the Liberal release notes that not a single actual infrastructure project will be specified now, they now tell us "Bridges! We meant bridges! Won't somebody think of the bridges?!". And they urge us to read the 2013 Auditor General's Report, where her warnings state that 293 bridges are in poor condition.

That is, of course, an important issue of public policy. Is that the $900million problem?

You see a bridge. Liberals see a $900million problem.

You know me....I'd like to do the math.

If you read the same report, the Auditor-general tells you the size of our overall bridge fleet. We have 2,608 bridges worth a total of $895million. She also notes at area graph 3.4 that the 293 bridges the Liberals now cite are "not unsafe, but will require maintenance in the near future".

So, fair enough, we have bridge maintenance to do. But is that $900million of borrowing accounted for? Well, no.

If you have 293 bridges that need work, and you have 2,608 bridges, or 11.2% of your bridges. If the TOTAL VALUE of your bridges is $895million, the total value of those bridges is just over $100millilon.

(And that would be assuming the bridges are all near the average of value of the fleet, which is likely generous to the Liberals. After all, the biggest, most expensive bridges get the most regular maintenance, and there have been major projects on bridges such as the Harbour or Princess Margaret bridges. The bridges in question would be smaller and cheaper and used less often.)

So if we spent 25% of the value of those bridges on maintenance, that's a $25million problem even under the most generous assumptions. And it is worth remembering that that the existing annual capital budget is $555million. Even if the Liberals just use existing budget plans, they would have $3billion of repair budget in which to find room for $25million worth of bridge repair if that's a priority.

So, why would they need to borrow ANOTHER $900million? Well, maybe the Auditor-General tells us when she suggests at the end of the section in bridges that someone should borrow $900million and fix this problem. Except that she doesn't suggest anything like this. She suggests a non-political monitoring and reporting problem. Because if anyone had read the prologue to her report, with the warnings about critical debt and falling credit ratings, they'd know that's crazy.

LIBERAL ARGUMENT #2: BUT THE GDP GOES UP!

Well, of course it does. If you borrow money and spend it, the GDP goes up. And their consultant's report tells them that if they spend $150 million more per year, you get $113 more in GDP. Of course, the report doesn't say that's a good idea, because the Liberals didn't ask him that question.

But we can do the math.

Generally, stimulus spending is designed to attract more private money into the economy to get things working. This is common sense. If the only people spending money are the government, and they're borrowing that, an economy will crater. So a good stimulus program will spur enough private investment that the GDP goes up even more than what government spends.

You already see the problem, right? If you're spending $150million and the GDP only goes up by $113million, you're actually getting less than you paid for.

To compare normal interaction between government spending and GDP, look at the status quo. New Brunswick's GDP is now about $32billion, or about four times higher than what government spends each year on programs and capital. And our economy, as Liberals correctly note, is one of the more fragile ones.

So if we have a GDP at 400% of government spending now, and that's not good, what serious party would borrow millions to get a 75% return on GDP? Only a party that sees the patronage and short-term political benefits of roadwork as more urgent than health or education spending.

As for the claim that "New Brunswickers will have $80million more to spend"? Let's all use our brains on this, folks. Here's a benchmark. If you borrowed $150million and threw it off one of those $900million Liberal bridges to be caught by passersby, then New Brunswickers would have $150million more to spend. Except they wouldn't, because it eventually has to be paid back. If it spurs private investment, then maybe that helps --but again, their own numbers show that doesn't happen.

Put another way, you could increase labour market income by $150million if you said "we are going to borrow $150million and hire 3000 teachers. As great as that would be, no one would seriously think you could justify that borrowing. So why borrow it for road work that you can't even specify now?

In the end, if the only money in your economy is borrowed government money, you'll eventually go broke. The scary part isn't just how weak these two arguments are, or that they still rent doing the math now --it's that the Liberals clearly released this plan without having done the math at all.

Monday, August 25, 2014

OK, I feel partly responsible. I've been saying for over a year that Brian Gallant won't tell us what he will do if he wins. So now that he has brought forward an idea, I have to admit that I pushed him.

But, oh, the humanity.

Here's the announcement. I know, I'm not supposed to link to another party's announcement. But by the time we are done here, you won't believe me if you don't see it yourself. So here it is. Brace yourself.

As you can see, the basic numbers are these: the Liberals will create a $900MILLION infrastructure fund and will, over six years, spend that $900MILLION to create jobs. How many jobs, you may ask?

1,700 jobs.

Here's the math. It basically speaks for itself.

If you spend $900,000,000 to create 1,700 jobs, that means you are spending $ 529,411.76 per job. Or, if you like, $ 88,235.29 per year, per job.

So yes, if you give Brian Gallant a little more than half a million bucks, he can create a job. You could also put that money in a bucket, blindfold my 4 year old nephew and have him stumble through town, and he might well be able to employ at least two people, but let's move on. Math is inconvenient.

You can't make this stuff up.

You may be saying, "Well, fine, Kelly, but that will put a huge dent in that unemployment rate, won't it?" If you're saying that, it's a good question and I'm happy to answer it.

No. It won't.

The workforce, according to Statscan, is 349,000 people. So adding 1,700 people to that workforce will move the employment rate by 0.49%. This means that, using Mr. Gallant's approach as a means of employing all able bodied New Brunswickers would take $18BILLION in expenses, or a little more than the entire provincial budget for two years.

Now, the Liberals do mention that if government spends $88,000 to give you a job, you pay more taxes back, which is true. And they helpfully point out that $13Million more will come back In revenue to the provincial government.

What they did not think of (and really, should have) is that even at very generous borrowing rates, the interest on $900 million would also have to come out of the yearly budget, to be taken from health and education. If interest were 3% a year, that's actually $27million per year, for a net loss of $14million every year that has to be cut or borrowed.

NO, he didn't borrow that much, Brian.

Further, the Liberals' own commissioned economic analysis suggest that this will only increase the GDP by 0.3%, a highly inefficient return on stimulus packages (by contrast, the Obama stimulus package was held by economists to have had a GDP impact of between 2.5% and 4.5% with its emphasis on getting money in the hands of working families and more defined infrastructure. And even with that much better return on investment, no one ever suggested that the borrowing could be responsibly sustained for six years). In fact, the Liberals' own analysis states that their expenditure will increase GDP by less than the actual expenditure.

Not sure we were supposed to actually read that. Perhaps they figured that we would nod reverentially and move on.

It's also important to note that when government borrows money, they increase demand for capital and drive up interest rates. So if you run a small business (the sector that actually creates jobs that last), then that's a lot of the oxygen the Liberals are taking up. This could actually hurt access to capital for local businesses.

So, what does this mean for you personally? Well, right now there are 349,000 workers in the provincial economy. That means that, before interest charges, the Gallant Liberals will borrow $2,578.80 that each one of the has to pay back personally, with interest. They will then pool this money and give it to 1,700 lucky people who work on infrastructure projects.

Um, how are people hired by Liberals to work on construction projects? .

Now, you might think that with all that infrastructure money, at least there will be a project that you'll like there, right?

Actually, um, no. They won't release the list until after the election. These are needs so pressing that they can't name any right now.

So, to sum up. We will borrow an amount equal to nearly the entire Department of Education, but none of it will go to education. We will add $2,500 per worker to the debt, add $14Million in cuts to health and education, add $900Million to the debt to move the employment rate less than half a percentage point and build some things no one can name right now.

I challenged Brian Gallant to stop being silent. Shakespeare said something about silence and fools. The question is, will we be fooled?

Wednesday, December 18, 2013

Having been through Albuquerque and Seattle now, I can say that the Americans have embraced microcredit in a more full way than we have. And the impact has been huge upon some personal stories.

It has been said that if you owe the bank a thousand dollars, you have a problem. And if you owe the bank fifty million dollars, then the bank has a problem. It is true that for many working families, access to credit became a significant problem after the economic slowdown. For many people, that means that the small business that gave them an alternative to a dead-end job or a vulnerable industry was out of reach.

In town after town, we've seen community groups who have stepped up to fill this void. They don't just rally the community to loan money -- microcredit agencies are building grassroots organizations that can offer mentorship and social capital to potential entrepreneurs. Often the loan is accompanied by initial workshops, reviews of business plans and a relationship that can last several months. Frequently the loan is delivered in instruments designed to accelerate one's credit score so that the business can grow.

The results are impressive. In bad economic climates, there is still a 50% success rate for many lenders! and over half of the successful businesses have employees two years out. The community-based nature of the sector allows for organizations tailored to unique needs of some underrepresented groups -- we met organization leaders with expertise in serving immigrant families in Seattle, working out of what was once known as "the Coloured Y" in Charleston building businesses for African-American women, and a group in Albuquerque with a real success story among Hispanics.

What they have in common is a determination to help clients succeed in a way that goes beyond traditional lending instruments. Cynics could reasonably note that the growth of microcredit and small entrepreneurial venture is a growth market because more secure traditional employment in industrial sectors is declining. They would be right, but it is still inspiring to see community leaders step up when the macroeconomic problem doesn't have easy solutions.

There would have to be an attitude shift in government to make it work here -- trusting local NGOs, accepting some risk, and a move away from bailing out failing businesses. One policy shift would seem eminently sensible. Most US states now allow unemployment or social assistance benefits to continue if the recipient is starting a businesses through an approved microlender. Even this change might move us even further in the right direction of making social assistance a hand up, instead of a trap with few ways out.

I'm running for the NDP nomination in the riding of Fredericton South. And I'd like to answer the questions I've been asked the most often as I've met with people one on one to let them know I'm thinking of running, and to ask for their support.

Why would you come back? Why now? And why the NDP?

I don't have a glib, sound bite-like answer to those questions. But I have some answers, and I'm going to share them with you.

Why the NDP? That's the most common question, and the easiest. It starts with this -- I believe that Dominic Cardy is the leader most qualified to be Premier of New Brunswick.

It has become trendy since Frank McKenna left for parties to choose leaders who don't have a firm grasp of policy or a clear sense of issues. The common reassurances are that policy "doesn't matter to voters", that the new leader "can learn all that", or "they can hire people to do that". None of those things are true, and you may have noticed that we've been throwing premiers out pretty quickly since Frank was here. Leaders like David Alward aren't breaking promises and changing positions because they're bad people. They break promises because they had no idea what the jobs entailed before they won.

I've been around enough to know that at some points the doors close and the judgement of the guy at the top matters. And I can imagine Dominic behind the desk. He cares enough to talk to people like grownups, speak in specifics, and isn't scripted the way other Opposition leaders have been. That's part of the reason he's been attracting strong people like Brian Duplessis to run, community leaders who have a track record of success, experience and principle.

No leader has all the answers, but Dominic is raising the right questions. He's challenging our old political culture with real reforms that are getting turned into law, rightly noting that provinces with good government attract more investment. He's asking why we spend more time bailing out failing companies than nurturing entrepreneurs. He's talking about municipal reform not from the perspective of merging rural communities, but giving cities like Fredericton the tools they need to develop affordable housing, attract business, and build infrastructure.

He's shown he can take clear stands, like his ability to say clearly from day one that changing pension plans for retirees without negotiation is wrong, and he considers a deal to be a deal. More cynical opposition leaders were going three months dodging the question by calling for a legal opinion which they never got, taking polls to see if they should claw back more retirement benefits, and then failing to learn the Legislature rules in order to oppose the government's bill. The reason Dominic was ready sooner, I suspect, is he was willing to start with doing what he thought was right instead of what would be good politics. And maybe, if we reward Dominic for talking about issues and specifics, politicians will start to see that good policy makes good politics.

So that's why I've decided that the NDP is the home for me, and why I believe this leader deserves full support from me.

Which leaves the question of why go through the trials of running, and why now? It's no secret that I've enjoyed my practice and found other fun ways to contribute to my community, like starting up our community theatre company, coaching basketball, and doing work with some great community groups and boards. Why not enjoy the perks of having had the job without the long hours and (sometimes deserved) criticism.

There are some things I'd like to work on. I love Fredericton, I chose this town as the place to raise a family. I believe in it, and we can make it even better together.

Fredericton has unique economic needs, with more emerging industries, startups, and research-based companies than elsewhere. Yet these sometimes get ignored provincially -- we are behind other jurisdictions in terms of support for early investors, commercializations of R&D and support for founders. I'd like to set up a team of Fredericton Founders, entrepreneurs who can help get the best legislation and ideas for startups and small business to me so I can work across party lines to make it policy.

I'd like to continue the work we started, a whole bunch of us, on fighting poverty. I'm proud of the reforms to social assistance, minimum wage and First Nations education that happened in my time in cabinet. We could do so much more. We have a mayor who's desperate to work on homelessness but no real provincial partners. We have councillours ready with solutions on public transit to connect jobs to affordable housing, but no champions to move it forward. So many jurisdictions are creating community-based microcredit to help families escape poverty, and we have a team at Social innovation who can create and innovate. I'd like to give families in poverty a voice in the Legislature.

We could actually do post-secondary education right as well. The last set of reforms put the focus on administrative issues like shared services. That was fine, but we need to talk about issues like faculty recruitment, affordable tuition and manageable student debt, and supporting research. We should be pushing Ottawa for the ability to have our own immigration policy to keep skilled graduates here so they can create and attract jobs. For Fredericton, this isn't just a social issue, it's an economic one, and the campus needs a representative who knows the campus.

So, yes, there are issues. But there's something bigger creating, as others have said, a fierce urgency to now.

I don't want my generation to be the first one to fail to leave our kids more opportunity than we had ourselves. But I fear we are on the way there, and when I watch the Legislature today I see a politics smaller than our challenges. The opposition reads a grim headline and blames government without offering solutions. Government reads a list of the other party's failings. They prosecute the opposing colour but never discuss ideas. I don't want an election where one party offers the status quo plus fracking and the other offers the status quo. I hope we can have a debate about how we do better together.

No one MLA changes the culture alone. (I'm pretty sure that when I was there the Legislature didn't turn into Masterpiece Theatre). But I've always believed an MLA's job doesn't just mean attending church suppers and reading party talking points. It means trying to raise the level of debate, using the seat to give forgotten people a voice, and earning your salary by trying to propose ideas. And when I see MLAs proudly saying they don't even read the bills they vote on, it doesn't seem we're getting the government we deserve.

Right now, the two old parties are full of guys who want to be Gordon Ramsey but don't want to learn to cook --they seek the rush of the fight without the discomfort of developing good policies. They seem so sure that all they have to do is tear the other guy down and they'll win, so they don't have to be any good. Maybe, just maybe, showing that we are willing to embrace a third party will also make the Liberal and Conservative parties the forces for ideas they once were! too.

I'm under no illusions that my own record was perfect. On some things, the numbers show I had some good ideas. I made mistakes, too, sometimes getting so caught up in developing ideas that I didn't collaborate with others enough. I have, as they say, baggage good and bad. Yet those bruises all represent chances to learn, improve and get better every day. I grew up here, and people here know me best. I wasn't perfect at 33, and I won't be at 43, but i learn a little from every experience and every person.

I hope people know that I've never made the arrogant mistake of playing it safe, putting my political survival ahead of getting the job done. I intend to run a campaign based upon discussing ideas, debating differences but not attacking personalities, and maybe I can earn your trust door by door by door.

I've never stopped believing that Fredericton can be the best place to live. Sometimes, when money runs out and easy solutions are unavailable, we unleash our greatest capacity to create. In the riding that contains our downtown and campus, I'm running offering a chance to show, together, that we are one creative, diverse community with one hell of a future.

Saturday, December 14, 2013

One of the most indelible images of my time in Senegal was found on Ile Gorée, the UNESCO heritage site which captures the origins of the slave trade.

In the midst of the beautiful, Oceanside island lies a rectangular cinder block building whose nondescript appearance as architectural proof of the banality of evil. For it was in this building where slave traders and their damnable local enablers held the men and women who had been kidnapped to be sold into slavery. As you walk past the shackles on the wall you will walk down a narrow corridor which opens right into the ocean. It was at this door where slave ships docked and their human cargo was loaded. The terrifying part of that passage, even to those visiting today in complete safety, would be the last thing the captives would have seen --the ocean carrying on infinitely, yielding no destination, no landmark, no certainty but a voyage into the unimaginable.

To the credit of the people of Charleston, South Carolina, the end of that voyage can also be seen today. There are good people who preserve the darkest parts of history so that we can be reminded today of how fragile democracy and human rights can be, and so perpetrators must live with the mark of history's judgement upon them.

Yet the most powerful part of this chapter was not the cobblestone streets or preserved slave markets which reflect the sad stories. It was the hopeful story that is told inside a plain office in a former bank on Charleston's King Street. It is a story that is still unfolding today. It is the story of the Gullah Geechee Nation, shared with us by one of its most determined authors.

The Gullah Geechee Nation runs up and down the coast of four southern states, from South Carolina to the northern part of Florida. It links the communities where the diaspora of African-Americans taken from West Africa took root after emancipation, recognizing the unique culture and traditions that grew among these families.

Over time, this story went from a quiet existence, felt but unrecognized, to full recognition in an Act of Congress which recognized the Gullah Geechee nation and established a corporation with a board dedicated to curating the history and culture of its people.

Now, there are some economic benefits to this idea of creating a symbolic territory of shared history. The businesses up and down the corridor benefit from the context, as businesses offering traditional Gullah food and crafts can find tines who want to consciously immerse themselves in the culture. The linked signage allows for promotion of a unique drive and small communities which benefit from providing a reason for the cars to stop. (Let me tell you now that Miss Charlotte's Gullah Rice and Fried Chicken is worth a trip).

There are bureaucratic advantages as well. The creation of a standing corporation provides a space where academics, businesses, artists and citizens can meet to share, tell and promote stories. Creating the space within the administrative world matters as well. When state highway departments began adding lanes they were able to work with the GGN to avoid ending the many traditional sweet grass basket sellers along the highway. And the GGN provides a portal for state governments to co-ordinate approaches.

Beyond policy ramifications though, there was a simple eloquence to the determined people who had begun tracing their stories and wound up inspiring an Act of Congress. Testimony from Gullah descendants who began to understand their history beyond the tale of slavery but as the story of a culture able to survive, the words of people who understood their grandparents speech pattern as historical rather than deficient, these matter as well.

It would not be hard for a New Brunswick government to adopt enabling legislation to give groups a path to non-profit corporations who could promote areas of cultural and historical importance. Given our academic and cultural sectors, there is potential here (this could have been a direction for the Capital Commission has government cuts not ended the experiment). It would not be much harder to place the issue on the agenda of Atlantic premiers' meetings to co-ordinate approaches. Is there potential here for New Brunswick? I'd love to hear others' thoughts.

Thursday, December 5, 2013

Folks who read this blog over the next three weeks may notice a certain enthusiasm for things I'm observing in the United States that may seem uncharacteristic for me. The nerdy enthusiasm for policy in general, yes, that is undeniably me. But some have occasionally told me I can seem stubborn and naturally skeptical of ideas, and here I will be advancing new ideas to consider with the bubbly enthusiasm of an actor in one of those Cialis commercials.

So, let me explain.

An exchange trip is a different type of experience. When I travelled as a minister, I had a number of goals to advance that required me to focus only on New Brunswick's immediate interests. If that meant making a speech which stuck to our perspectives at a roundtable, or if it meant quietly pouring shots of bai-Jo into a potted plant so a smart senior official in China couldn't toast me into submission, well, that was the job.

Here, I have the gift of seeing something new for three weeks and considering it with no interest. I love to share the strengths of Canada, but I also love to hear what others are proud of, how they see the good in their country. This is how we learn from each other.

When the creators of Bugs Bunny were developing cartoons, they insisted on a Big Yes Session. That was just a time when no idea could be dismissed. No one was allowed to say "no" or "for heaven's sake, Jim!" You had to first think about how to make it work.

Like Canada, the U.S. has challenges. As with us, their public service is full of decent but human people who struggle with the scope of some challenges. Yet, also like us, they have solved some problems with good will, hard work and creativity. So, on this trip, I want to see the good through their eyes and think first about how to make it work at home.

I'm trying to apply the Big Yes Session to the trip as well, so new experiences are getting embraced. My first afternoon here, a beer at a local sports bar led to chatting with folks next to me and soon, five of us from three different cities were enjoying Indian food on a rooftop patio (I also have an invite to Louisville, Kentucky). A Canadian pilgrimage to Adams-Morgan led to some brave Canucks entering a reggae club because the bouncer called out to us -- and we found a $5 all-you-can-drink bounty inside. (Yes, restraint was shown). Crystal City microbrews are great.

Anyway, this leftie Canadian is looking for everything to say yes to in America. I haven't lost my talent for healthy skepticism. But maybe, somewhere amidst the monuments of the National Mall and the obvious, unspoiled emotion they evoke in our American neighbours, I've also been reminded that both our nations were founded upon a hearty dose of optimism as well.

The Center For Immigration Law is a few blocks from the action on Capitol Hill, although it is calm even as their signature issue heats up. The Center works for common sense immigration reform, and right now the legislative calendar is offering them their close-up. So folks there are busy trying to inject facts and reason into an intensely political issue.

Where facts and logic take them is to the inescapable conclusion that more immigration is a good thing. And the facts are on their side. For companies seeking a place to locate, workplace skills are a site selector and immigrants are representing as much as 80% of the growth in some hard-to-find skills in the STEM sector. (Note that STEM refers to a grouping of science, technology, engineering and mathematics skills and is a preoccupation American policymakers hold with considerable passion)

As well, immigrants are considerably more likely than average to start a business and to succeed to the point that they are job creators. Far from taking jobs from established citizens, immigrants tend to both create and attract more jobs for their new neighbours and countrymen.

If you're thinking that more people and more jobs would sound pretty good at home in New Brunswick, you're right. Our population has declined for all but a handful of the last twenty years (Shawn Graham, so frequently maligned, was the most successful premier by the numbers). Yet lacking large urban centers, existing support communities and autonomy over immigration policy doesn't always allow New Brunswick to work with the urgency our declining population demands.

Trying to take some opportunity for learning away from each of our sessions, one set of numbers keeps nagging at me. If you listed the Top 100 American cities in population, and then listed the 100 cities with the fastest immigration growth, you would notice 29 cities that may contain the answer for New Brunswick. Twenty-nine cities are not among the biggest, but are punching above their weight when it comes to immigration. The folks at the Center, understandably busy with government relations, have noted this group but haven't yet done work to identify what these 29 overachievers have in common. Sure, some may have a unique industry that rains jobs down like manna from heaven, but others may just be enacting policies and attitudes that work. This would be a great job for a keen researcher at our policy centers in New Brunswick.

If we can figure that our, we should be demanding that Ottawa give us the power needed to try something different. Our shrinking numbers, down in the skills companies demand, the incomes our social safety net requires, the middle-class that makes communities click-- these numbers are an emergency that demands action. New York mayor Michael Bloomberg has called for a policy of stapling a green card on to every university and college degree earned by foreign students. Frankly, we could do a lot worse.

That brings me to the moral challenge for our political and business leaders. Too many people still cling to a simple, easy-to-understand, wrong belief that if we have unemployed people here, more immigration means more people "taking" scarce jobs. This is built upon a wrong assumption, the assumption that jobs are a static good unaffected by the arrival of people with skills and drive and entrepreneurial spirit. But it is a powerful belief.

Something dangerous has entered our political bloodstream; the belief that it is a leader's lob to poll and discover popular misconceptions and repeat them back to us rather than challenge us. In this political theory, those who attempt to challenge conventional wisdom are "arrogant", those who accept existing beliefs are humble purveyors of a new approach. But the moment calls for leaders with a different humility -- the humility to take risks in the service of the greater good of ideas and evidence-driven policy.

In the end, we learned that places which attract immigrants are places who want immigrants and make that a civic goal. And each one of us who love New Brunswick need to be willing apostles for the benefits of immigration, convincing our neighbours that greater opportunity awaits all our kids if we have the courage to think differently, globally and openly about opening our doors to those who want to join our communities.

It was nice to meet people who are passionate about following the evidence and opening their shores up to others. I hope to bring the evidence and the passion home with me.